HomeMy WebLinkAboutA033 - Updates to Chapter 28, Electric Rate ModificationsITEM #:36
DATE:09-23-25
DEPT:ELEC
SUBJECT:UPDATES TO CHAPTER 28, ELECTRIC RATE MODIFICATIONS
COUNCIL ACTION FORM
BACKGROUND:
Electric utilities periodically conduct cost-of-service and rate design studies to help make long-
term financial plans, promote efficient use of resources, and provide fair and equitable rates
for customers. Ames Electric Services completed a cost-of-service study in 2024. At the June
18, 2024, City Council/EUORAB Workshop, Mark Beauchamp from Utility Financial Solutions
presented results from the cost-of-service study and recommended a series of 1.5% increase
to Electric rates across the board beginning in 2025. The Electric Utility Operations Review
and Advisory Board (EUORAB) met on June 20, 2024, to discuss the cost-of-service study
and rate increases at the direction of the City Council.
Based on the results of the study and EUORAB's review, EUORAB recommended that a
1.5% rate increase be adopted to go into effect following the 2025 summer season. This
increase is to be applied to monthly customer service charges, demand rates if applicable,
and energy rates. In anticipation of the Council's approval, the revenue reflected in the
FY 2025/26 budget reflects the implementation of the 1.5% electric rate increase.
PROPOSED CHANGES TO THE CUSTOMER SERVICE CHARGE, DEMAND CHARGE, AND
ENERGY CHARGE:
T h e Customer Service Charge is a fixed monthly amount charged to each customer,
regardless of how much energy is used. The Customer Service Charge covers the cost of
customer class-specific infrastructure (like a service drop and meter), a portion of the
distribution system needed to serve the customer, meter reading, and billing. EUORAB has
recommended raising the Customer Service Charge for Residential, Small Commercial,
Commercial and Industrial customers by 1.5%.
The Demand Charge is a rate charged to Commercial & Industrial customers and is multiplied
by the 15 minute "peak" consumption by the customer in a given month. There is both a
summer season rate and a winter season rate. EUORAB has recommended raising the
Demand Charge for Commercial and Industrial customers by 1.5%.
The Energy Charge is a rate charged to all customers and is multiplied by the total electric
consumption in a given month. For Residential and Small Commercial there is both a summer
season rate and a winter season rate. Commercial and Industrial customers have a constant
year-long rate. EUORAB has recommended raising the Energy Charges for all customers by
1.5%.
1
Customer Class
EXISTING PROPOSED
Customer
Service
Charge
Winter/
Summer
Energy
Rate
$/kWh
Winter/Summer
Demand Rate
$/kVA
Customer
Service
Charge
Winter/
Energy
Rate
$/kWh
Winter/Summer
Demand Rate
$/kVA
Residential $ 14.25
$ 0.0893/
$ 0.1101
$ 14.46
$ 0.0906/
$ 0.1118
Small
Commercial $ 20.50
$0.0967/
$ 0.1175
$ 20.81
$ 0.0982/
$ 0.1193
Commercial $ 156.00 $0.0653
$ 8.01/
$ 10.71
$ 158.34 $0.0663
$ 8.13/
$ 10.87
Industrial $ 1,100.00 $0.0642
$ 7.80/
$10.40
$ 1,116.50 $0.0652
$ 7.92/
$10.56
At this time, EUORAB is not requesting any changes to the new Time-of-Use rates created at
the end of 2024.
ALTERNATIVES:
1. Direct the City Attorney to draft changes to Section 28 of the Municipal Code, as
described above, and bring it to a future City Council meeting for adoption.
2. Do not direct the City Attorney to draft changes to Section 28 of the Municipal Code.
CITY MANAGER'S RECOMMENDED ACTION:
Adopting the proposed changes will better align existing rates with the cost-of-service
study results which assumes additional revenue needs for new generation
infrastructure along with increasing renewable resources. Therefore, it is the
recommendation of the City Manager that the City Council adopt Alternative 1.
2